Which is better to heat water; solar PV or solar thermal?

When I started Eco2Solar in 2007 it was clear where the growth area was in the market. Fuelled by rising energy prices, increased awareness of climate change and fuel security, as well as new targets such as Code for Sustainable Homes or Merton Rule (10% of energy from renewables) for new build homes, the technology of choice was solar thermal heating; mostly for hot water.

Solar PV was very much a fringe technology; perceived as very expensive with a long payback; even with grants that were available.

The Feed in Tariffs (FIT) changed all that! PV became cost effective, financially attractive and even a bit “sexy”. Prices of systems plummeted to reflect the enhanced competition and economies of scale – and rightly so. A solar PV system can now be installed for around one third of the price you would expect before the FIT’s.

This all but left poor old solar thermal technologies out in the cold (not literally fortunately!)

Solar thermal is still an attractive technology though. It is extremely efficient – around 90% of radiation can be turned to heat. It is also appropriate for many applications in buildings; particularly for heating hot water or swimming pools. Heating water uses 25% of the energy in the average home. Therefore solar thermal should be considered first where it makes sense i.e. heating water.
However, many homeowners and businesses are installing the largest PV system they can fit on their roof and then looking at ways to use the excess electricity to heat water. Whilst it makes sense to utilise as much electricity from a PV system as possible, if you are looking to heat hot water, does it make sense to use a dedicated technology?

I looked at this in the light of current costs and what I discovered was surprising! An average solar thermal system of 3m2 of evacuated tube or 4m2 of flat plate would be specified to heat 180-200 litres of hot water; providing 50 – 70% of hot water. Such a system would cost around £3,750. To produce a similar level of energy from a solar PV system would require approximately 1.5kWp and cost – guess what – about £3,750.

The differences are that a solar PV system will take up around 10m2 of roof space whereas the solar thermal one would take up 3 -4m2. So if roof space is limited then the solar thermal will provide a better solution. On the flip side, solar thermal only produces heat and a PV system produces electricity which can be used for many things. Also you get FIT’s now to install a PV system and you will need to wait for domestic Renewable Heat Incentive (RHI) and we don’t know how much it will be.

To be fair this analysis is a little simplistic in that a solar PV system will need some tweaking and some kit to ensure that it can use the energy cost effectively to heat water.

Also, this only holds for small solar thermal systems; with larger arrays for homes with high hot water use, commercial buildings or swimming pools – the economies of scale mean that the solar thermal heats water much more cost effectively. The high cost of other components such as the cylinder and pipework do not increase in proportion as the system size increases.

And, of course, non-domestic solar thermal systems will be entitled to RHI.

So, it’s up to you whether to install a small solar thermal or PV system. It really depends on roof space available and what you want to do with the energy once you have generated it.

Rumours of Solar PV’s death have been greatly exaggerated

Like many people, I have noticed the drop in installations since the introduction of energy efficiency (EPC) requirements on April 1 this year. With DECC publishing weekly data on the feed-in tariff scheme’s capacity, I am not alone.

It has been suggested in the press and by some in our industry that the recent cuts will kill the industry. Some said a 50 per cent cut to the feed-in tariff (FIT) would kill the industry back in December 2011, but, as I suspected, this did not materialise.  Unfortunately the suggestion that the cuts would kill off the industry is what has dominated the press coverage.

So is this why do customers not seem to be placing orders?

The first reason is because customers are confused by the conflicting information that is being peddled about. They may also be fed up with the constant changes and tinkering by the Government.

But, to put the situation in context, the FIT scheme was always meant to be temporary to support a new fledgling industry. It was always designed to be reduced in line with costs.

The fact is the current rate of 21p works. As an industry we need to focus on reassuring the public that solar still provides great returns. The current tariff of 21p/kWh for domestic schemes is producing a sound Annual Return of up to 10%; thanks to the reduction in PV component prices – which is still guaranteed for 25 years and linked to inflation.

That is equivalent to the return we could provide a year ago when people were queuing up to buy solar PV systems! We just need to ensure that the costs and benefits stay in line going forward.

Secondly customers believe that the EPC requirements will make a solar energy system prohibitive. To put customer’s minds at rest we have now installed quite a few systems following an EPC. This EPC can be organised in days and, in more cases than not, simply comes up with a ‘D’ result following the installation of the solar PV system or a few simple measure; like a temperature thermostat on the hot water cylinder. Most buildings (domestic and commercial) pass without fuss.

So we need to be positive and extol the huge benefits of PV because we recognise that we have a great technology that has delivered astonishing cost reductions in recent months and years – and will continue to do so.

Solar powered pig farm

Some clarity at last on Solar tariffs?

DECC have now announced their response to the recent consultation on Feed in Tariffs. Although this may not be exactly what the solar industry wanted, it will bring an air of relief for us all. The news will help to relieve the anger at the recently announced rate reductions and the previously suggested energy efficiency requirements.

A more predictable system with more regular reviews of the rate, instead of introducing more market uncertainty, could actually create a more stable marketplace in the UK, and is a model used in many European countries for the same reasons. Hopefully DECC has learnt some lessons from this and has made a serious attempt to put in place a more sustainable scheme for the future.

The rate of 21p (or equivalent for larger systems) is now confirmed until July 1^st 2012 and the reduction at that time should be predictable. There is a requirement for an EPC to be eligible for this rate – but at least that is a ‘C’ rating which over 50% of dwellings should qualify for. If additional works are required, they should be relatively inexpensive in most cases.

As ever, it will not get any better so now is as good a time as ever to invest in solar energy.

Solar PV – FIT for purpose?

What a brouhaha we have seen recently. The immensely successfully Feed In Tariffs (FIT) which have seen an impressive growth in the installation of solar photovoltaic (PV) panels in particular across the UK  have been altered by the Government more than once and this has created a lot of uncertainty.

So what is really happening?

Well – to cut a long story short –  the Government (DECC) spotted in late 2011 that the FIT scheme was becoming a little too successful for its own good (or maybe their liking!) and the budget that they had imposed themselves might be exceeded.

They decided to initiate a process to reduce the incentives, which included a public consultation, but introduced this too quickly resulting in a massive influx or orders and installations during November and December 2011 and a successful legal challenge in the High Court by Friends of the Earth just before Christmas. The High Court said that the Government action was unlawful.

The Government decided to appeal to the Court of Appeal  which was heard in January 2012; again the Government was unsuccessful and their appeal was denied – all 3 judges were unanimous.

So where does this leave us all?

Technically the current rate reverts to the old rate (43.3p up to 4kW) until 3^rd March when it will “legally” change to 21p. However the Government has sought permission to appeal again to the Supreme Court. If this is allowed and the Government is successful then the Government’s original date of 12th December 2011 for the rate decrease could stand.

To put this into context, 4 senior judges have now decided against the Government; what are their chances of success if they appeal further to the Supreme Court? In addition to this the Supreme Court may take 2 months to even decide if leave to appeal will be given and a further 6 months to hear the case. By then 3^rd March will be well and truly gone!

In conclusion

• The rate between now and 31^st March is GUARANTEED to be at least 21p for systems up to 4kWp
• There must be a decent chance that the Government will not be allowed to appeal or their appeal will be unsuccessful – in which case all installs from 12th December 2011 to 31st March 2012 will receive 43.3p or equivalent for the full 25 years. Unfortunately this is NOT GUARANTEED.
• There is currently also no certainty after 1st April – rates could go down again. Again NOT guaranteed.

So if you think that the new rates are attractive enough at 21p, now is a great time to invest in solar PV and the upside is that you might get 43.3p. What is certain is that rates will not get any better over time!

Eco2Solar Sees Four-Fold Increase in Solar Panel Installations to Beat Tariff Deadline

Eco2Solar has pulled out all the stops to commission more than 200 domestic solar PV installations qualifying for the 43.3p feed in tariff rate before the deadline announced by the Government in October.

The announcement that the tariff – which is paid to householders for every kWh of electricity they generate from solar panels – was to be more than halved from 43.3p to 21p for installations registered after December 12th prompted a flurry of enquiries and orders, following this we geared up our operation to install and commission as many as possible during the six-week window before the deadline expired.

Generally, Eco2Solar handle around 50 installations per month but in the six weeks between the announcement and the deadline, the number of domestic projects rose to 200.

These, together with the commercial projects which we completed during the period – which included installations for Stratford upon Avon hospital, a new social housing development at Russell’s Hall, Dudley and the Midlands Arts Centre (MAC) in Birmingham – mean that Eco2Solar was responsible for the installation of over 3,000 solar panels representing 700kW of energy in the six weeks from October 31st.

This is the equivalent of over 300 tonnes of CO2 annually – or the equivalent of planting 1,500 trees every year. It is estimated that householders and building owners will earn nearly £200,000 between them in FIT every year.

The achievement was a complete team effort, says Eco2Solar managing director Paul Hutchens.

“Since the FITs announcement, it has been a very busy period for everyone at Eco2Solar and this could not have been achieved without the hard work and dedication of the entire Eco2Solar team,” he said.

“It’s important to realise that whilst the old 43.3p FIT gave customers an excellent return on their investment, Eco2Solar have already put together an offering for the new 21p/kWh FIT rate proposed by the Government in a recent review of solar subsidies.”

“The new offering will provide an average 10% return on investment for new purchasers, alongside an average 10 year payback period*, making it a fantastic investment opportunity.”

*Based on a 4kWp, south facing, 30° solar PV installation

Solar is not just about Feed in Tariffs

There has been much talk and debate about solar panels recently; most of it about solar photovoltaic (PV) and the Feed in Tariffs (FIT).

 

However, there is another game in town and it is potentially far larger than solar PV. Heat in buildings for space and water heating accounts for nearly 70% of energy consumed by them – so maybe we should be paying some attention to that.

 

The Renewable Heat Incentive (RHI) is the heat equivalent of the FIT and is due to be introduced for domestic properties in October 2012. It will pay homeowners an income for every unit of heat generated by their heat pump, biomass boiler or solar thermal water heating system.

 

In the meantime a one-off payment called the RHI Premium Payment is available to all homeowners as an incentive to install these technologies now – a bit like a grant – and still be eligible for the RHI when it arrives next year.

 

Before FIT, solar thermal was by far the most popular of the renewal technologies and is installed in over 100,000 homes in the UK. The technology is very reliable, easy to install and should provide 50-70% of your hot water all year round.

 

In fact 31% of the 2,000 RHI Premium Payment  vouchers issued so far have been for solar thermal. Each will receive £300 towards the cost of installing a solar thermal system.

 

This is starting to filter into more interest as homeowners realise the value of this technology.

 

So, before you become too fixated with the FIT and the annoying deadlines imposed by this Government, think about installing a solar thermal system. It is less expensive than solar PV (about £4,000 on average), is easy to install and good for the environment – and you get £300 towards the cost!

Why it still pays to install solar panels

After prompting a massive expansion in the solar panel sector with the introduction of Feed In Tariffs in 2010, the government dealt the industry a harsh blow last week with the announcement that the tariff – which is paid to householders for every kWh of electricity they export back to the national grid – is to be cut by more than half from 43.3p to 21p per kWh.

Regardless of the wisdom of the move from a government which is supposedly committed to a green agenda, the fact remains that solar panels still represent one of the best investments a homeowner can make, both financially and for the benefit of the planet.

Apart from significantly reducing a household’s carbon footprint, solar panels can save the average home between £700 and £800 per year – a combination of income from the feed in tariff, savings on energy bills and the bonus the householder gets for exporting the surplus electricity generated.

Eco2Solar has calculated that, based on a typical 3kWp system at a capital cost of £7,875.00, this represents an annual return of almost 10% – and it’s tax-free, linked to inflation and guaranteed for 25 years. Where else could you find an investment that pays such a healthy, predictable rate of return – and pays off your original capital outlay in just over ten years?

Yes, the reduction in the feed in tariff means that these figures are less attractive than they were a few weeks ago – but we need to look beyond the gloomy reports that are dominating the news agenda on this subject and spread the word: solar power will still be a major source of energy in the future and one of the best ways householders can help save the planet, as well as generate a healthy return on their investment.